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TMI Blog2017 (9) TMI 1290X X X X Extracts X X X X X X X X Extracts X X X X ..... ree appeals filed by the assessee arise from the common order of the ld. CIT(A)-XXXII, New Delhi vide order dated 23.05.2014 for assessment years 2008-09 to 2010-11. Since the appeals pertain to same assessee and were heard together involving identical issues, these are being disposed of by this consolidated order for the sake of convenience and brevity. 2. In assessment year 2008-09, the assessee has raised the following grounds of appeal: 1. That, on the facts and in the circumstances of the case, the learned CIT (A) has erred in law in confirming the impugned addition of ₹ 5,07,316.00 in the salary income earned in a foreign domain and which is only addition made vide order passed u/s 153 is bad in law, without jurisdiction and void ab initio and deserve to be quashed as such, as the same is in respect of a closed assessment which has not abated and is made not on the basis of any incriminating material unearthed during the course of search ( i.e. not on the basis of any concealed material which was either not disclosed or was intended not to be disclosed ). Rather the addition is made to the normal income already assessed/disclosed and not in respect of any undi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rging of interest u/s 234A and, b) is not justified in law in not deleting interest u/s 234B and c) is not justified in law in confirming charge of interest u/s 234D and 244A . 4. In assessment year 2010-11, the assessee has raised the following grounds of appeal: 1. That, on the facts and in the circumstances of the case, the learned CIT (A) has erred in law on merits in confirming the impugned addition of ₹ 5,73,112.00 in the salary income earned in a foreign domain in respects of various statutory non refundable deductions from the salary which are diversions at source ignoring the real income test and subjecting the impugned amounts to double taxation. 2. That without prejudice to the above grounds of appeal, on the facts and in the circumstances of the case, a) the learned CIT (A) has erred in law in not deleting the charging of interest u/s 234A and, b) is not justified in law in not deleting interest u/s 234B, c) is not justified in law in confirming charge of interest 244A. 5. As regards the legal issue in assessment years 2008-09 and 2009-10, we find that the issue is identical to the legal issue raised in as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out at the premises of the assessee on 21/01/2011 and notice under section 153A of the Act was issued on 09/01/2012, in response, the assessee filed return of income on 24/01/2012, declaring total taxable income of ₹ 70,86,640/- including income from salary. In the scrutiny proceedings, the Assessing Officer observed that, the assessee received gross salary of CHF 46,144/- from M/s San Lorenzo AG, Switzerland and the employer made deduction of federal pension, Social Security charges, accidental insurance, group health insurance, cantonal pension, personal tax and fixed annual cantonal tax aggregating to CHF 6518/-. The assessee declared net salary of CHF 39,626/- for tax in the return of income filed in India. In response to the query of the Assessing Officer as why the gross salary might not be taxed, the assessee submitted that the deductions were diversions at the source itself. The assessee submitted that the deductions had not been included in the salary income because they were never part of salaries and also the fact that pension was separately taxable as salary income at the time of receipt thereof as salary income, which would amount to taxing the same amount twice. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The case laws relied upon by the learned AR is in respect of social insurance deduction in case of all French National in the case Gallotti Raoul and Citizen tax in the case of NHKT Japan Broadcasting corporation. Both the deductions, are made for the benefit of all the citizen of the respective country. No benefit accrues to the employee from these deductions directly. In those circumstances, it has been held that it is diversion at source, therefore, not taxable. In present case, first narration for deduction is contribution for pension fund. Contribution for pension fund in my view will give direct benefit to the employee through regulated by the Government Law. Hence, such deduction cannot be called diversion of Income. Second deduction mentioned in the certificate is fixed cantonal tax if this deduction does not provide direct benefit to the appellant but made for the benefit of citizen at large, then it will constitute diversion of income. Similarly, in the case of insurance whether it is made for the direct benefit of the employee. In view of the above, I direct the Assessing Officer to examine whether cantonal tax, insurance and other deduction will directly benefit th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute, the Hon ble Delhi High Court summarizes the legal position as under: Para 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A(l) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs in which both the disclosed and the undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer has also not mentioned any document found during the course of search evidencing that assessee obtained benefit of pension out of the salary income. We observe that the fact of deduction reduced out of the gross salary was came to the notice of the Assessing Officer in assessment proceeding only and thus it cannot be said that addition made in respect of deductions claimed by the assessee, was on the basis of any incriminating material unearthed during the course of search. Thus, respectfully following the decision of the Hon ble Delhi High Court in the case of Kabul Chawla, no addition could have been made in the year under consideration. The ground No. 1 of the appeal is accordingly allowed. 10. Since we have already held that no addition could have been made in the year under consideration, the other grounds raised by the assessee are merely rendered infructuous and accordingly dismissed . 6. In the facts and circumstances of the present case which are identical to the assessment years 2007-08 and 2010-11 decided on 04.08.2017 that no assessment was pending has not been disputed by the ld. CIT-DR and the only dispute is with regard to the incriminat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t material on record. On the issue in dispute in the year under consideration , the Ld. CIT-A has followed his finding in assessment year 2011-12 . The Ld. CIT-A in assessment year 2011-12, after considering the submission of the assessee in the cases relied upon has decided the issue in dispute as under: 33 Findings:- I have considered the assessment order, written submissions and oral arguments of Ld. AR. He has argued that the deductions are on account of federal pension, social security charges, accidental insurance, group health scheme, cantonal pension, personal and fixed annual cantonal tax. These charges are overriding charges and diversion at source and not application of Income. He argued that these statutory levies are non returnable. In support of his arguments, he relied upon the decision of Galloti Roul Vs ACIT 61 ITD 453 (Prom) and NHK-Japan Broad Casting Corporation Vs. CIT 101 TTJ 292 (Del) approved by Hon ble Delhi High Court by judgment cited 291 ITR 331 (Del). A perusal of decisions in the case of Gallotti Raoul reveals that the nature of deduction was in respect of social security contribution to social security organization formed under the stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration, the Ld. CIT-A also considered other arguments of the assessee and held as under: I have given the findings that if the appellant derives benefit from such statutory deduction, then the same is not diversion of income. The Ld. AR has argued for reconsideration of the decision mainly on the ground that such deduction are in voluntary, non returnable and go to foreign government and not for exclusive advantage of the assessee. I do not think that there is any scope for reconsideration of my earlier decision. In my view if the appellant derives any benefit from such deduction which may be in future as per the plan of foreign government, then such deduction cannot be said diversion of income. Ld. AR's argument of double taxation once now and other time at the time of availing such benefit is also misplaced as term of such benefit and quantum is not known. Accordingly, I direct the ld. Assessing Officer to follow my decision on this issue as decided in appellant s case for A.Y. 2011-12. This ground is partly allowed for all assessment years. 14.5 We find that the Ld. CIT-A has considered both the deduction in respect of pension and other deductions lik ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not proven to be on the basis of change of opinion. Second arguments of Ld. AR is that as per section 234B(3) interest cannot be charged in view of the decision of Hon'ble ITAT has given the verdict in view of provisions of section 234B(3) i.e. interest is chargeable from the date of regular assessment while completing the assessment u/s 153A or 147. With great respect , in my view, where the reassessment is made u/s 147 or u/s 153A is made for the first time, the interest u/s 234B is covered by 234B(1), the same should be regarded as regular assessment. This vies is supported by Explanation 2 to section 234B(1) reproduced as under: Explanation 2- Where, in relation to an assessment year, an assessment is made for the first time under section 14710 [or section 153A], the assessment so made shall be regarded as a regular assessment for the purpose of this section. Accordingly, the interest u/s 234B(1) is to be charged from first day of April next following such Financial Year. In present case, the assessment u/s 153A is made for the first time, and the assessee has not proven that she has taken due diligence and care and has not anticipated the enhanceme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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